Alex Mashinsky, the founder and former CEO of Celsius Network, has been sentenced to 12 years in federal prison for his role in a high-profile cryptocurrency fraud case. The sentencing, handed down by U.S. District Judge John Koeltl in Manhattan, marks one of the longest prison terms imposed in connection with the 2022 crypto market crash, which wiped out billions of investor wealth.
Mashinsky, aged 50, was convicted after pleading guilty in December 2024 to charges of securities fraud and commodities fraud. Prosecutors argued that he misled customers about the safety of Celsius’s platform and manipulated the value of its native cryptocurrency. Despite Mashinsky’s plea for leniency and his expression of regret, the court opted for a substantial sentence, reflecting the magnitude of financial harm and personal enrichment involved.
Prosecutors Seek Accountability in Crypto Collapse
In their argument before the court, federal prosecutors pushed for a 20-year sentence, describing Mashinsky’s actions as deliberate deception that caused massive losses to thousands of retail investors. According to court filings, Mashinsky personally profited more than $48 million, even as Celsius’s financial condition worsened and investors lost access to their funds.
“Digital assets have strong potential, but they are not a license to deceive,” said U.S. Attorney Jay Clayton, emphasizing the need to send a message of accountability amid the unregulated chaos of the crypto boom and bust.
As part of the sentencing, Mashinsky was also ordered to forfeit $48.4 million in ill-gotten gains and will serve three years of supervised release after completing his prison term.
Celsius’ Collapse and the Larger Crypto Meltdown
Founded in 2017 and headquartered in Hoboken, New Jersey, Celsius Network positioned itself as a “crypto bank”, offering depositors interest rates as high as 17%—a promise that attracted millions of users during the rise of decentralized finance (DeFi). However, the firm collapsed in July 2022, filing for bankruptcy following a wave of customer withdrawals and a sharp downturn in crypto prices.
At the time of its bankruptcy, Celsius revealed a $1.19 billion hole in its balance sheet, raising red flags about the platform’s financial practices and risk disclosures. Mashinsky and other executives were accused of withholding critical information from investors and continuing to make false assurances about the safety and sustainability of their business model.
The case against Mashinsky is seen as a landmark in crypto law enforcement, coming in the wake of other major cases, including those involving FTX founder Sam Bankman-Fried and Terraform Labs’ Do Kwon.
Ongoing Civil Litigation and Regulatory Crackdown
In addition to the criminal conviction, Mashinsky faces civil lawsuits from multiple regulatory bodies, including the:
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U.S. Securities and Exchange Commission (SEC)
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Commodity Futures Trading Commission (CFTC)
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Federal Trade Commission (FTC)
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New York Attorney General Letitia James
These agencies allege violations ranging from misleading marketing practices to unauthorized investment management and financial misstatements. The lawsuits are part of a broader crackdown on crypto firms following years of lax oversight and explosive growth, which left regulators scrambling to catch up with innovation outpacing the law.
Mashinsky, originally from Ukraine, later moved to Israel and eventually settled in New York, where he launched Celsius and rose to prominence in the crypto space. Once hailed as a visionary for democratizing finance, he now joins a growing list of tech entrepreneurs facing consequences for abusing investor trust in an unregulated market.